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Anyone able to help

How do bank valuations compare to those of say the market whne buying a house. I am thinking about putting in an offer on a place, but the last time I had 'subject to finance' in as a clause which apparently cost me in the wash-up. I've got all the pre-approval from the banks. Any home loans people out there?

Usually the banks value a house on "worst case" ie the minimum you could sell it for. The real estate agents are usually a bit higher in their prices.
But at the end of the day, it depends on how much you are willing to pay for the house.
Just make sure that you leave yourself a few back doors to slip out through if you need to. ie Subject to Finance or Subject to Favourable House Inspection. Something along those lines.

Good luck with the house.

cheers, I'd say I'll put subject to finance but that pre-approval for borrowing has already been given.

Ah good... make sure you get a Building Inspection. Will cost you about $150.. but it could save you bucket loads if they find something wrong. You can always put that in as a clause with your offer.

you could also try to get the capital value (government valuation) either from the council where the property is or the lands title office.. this will give you an idea of how much profit is being made between the government valuation and the retail price.

Lunchcutter wrote:you could also try to get the capital value (government valuation) either from the council where the property is or the lands title office.. this will give you an idea of how much profit is being made between the government valuation and the retail price.

Yep, might try and do that, thanks Lunchcutter.

Have a look at what the council thinks its worth then add another 20-30 percent, same goes with the bank valuation. Its a rough estimate but usually around the mark.

CA - i work for a bank (same as Phil's) and 90% of contracts are "subject to finance" so it shouldnt make any difference to any offer and also gives you an "out" should there be another reason you want to back out of the contract...ive written letters for clients before saying we declined their finance for the purchase when we would have given them the finance easily (they changed their mind!)

If you have pre approval you can sign a unconditional contract which may help negotiations if your battling against others

As for valuations...banks value about 10% below the market but if purchasing we take the contract price. Councils are around 20% lower

You can also get a licensed valuation for about $100- which will be pretty spot on...

Lunchcutter wrote:you could also try to get the capital value (government valuation) either from the council where the property is or the lands title office.. this will give you an idea of how much profit is being made between the government valuation and the retail price.

Where I live, if the council valuation is $300,000, market value is $350,000+

ca- make sure you get a Termite (White Ant) Inspection. It's called a "Prior to Purchase". it's a legal document, & well worth it. The amount of people who "buy" trouble is quite high. PM me if you wish, I can arrange this, if & when your ready.

Punk Rooster wrote:ca- make sure you get a Termite (White Ant) Inspection. It's called a "Prior to Purchase". it's a legal document, & well worth it. The amount of people who "buy" trouble is quite high. PM me if you wish, I can arrange this, if & when your ready.

even in the Advertiser, when an advert is made to look like a news item, they give it the "Advertisment" tag on the top

Ian wrote:

Punk Rooster wrote:ca- make sure you get a Termite (White Ant) Inspection. It's called a "Prior to Purchase". it's a legal document, & well worth it. The amount of people who "buy" trouble is quite high. PM me if you wish, I can arrange this, if & when your ready.

even in the Advertiser, when an advert is made to look like a news item, they give it the "Advertisment" tag on the top

Punky shows some heart Ian and it could be Sponsor.......?

ca if you want to get a valuation from the LTO, try and get the vendor to go you halves. I did with my last house purchase and it's quite a normal thing. Your conveyancer could help you with this. They're quite expensive now I think, over $100 so every cent you can save certainly helps.

All i know is that it's a bit harder since interest rates have gone up again.

Ian wrote:

even in the Advertiser, when an advert is made to look like a news item, they give it the "Advertisment" tag on the top Wink

Very funny Ian. But I'm all for the Punkmeister, may use his expertise one day...all for initiative.
ca...how's the house hunting going??

Yep, put in the offer and got the place. Stressfull couple of weeks talking to banks and building inspectors. Punk Rooster organised the pest inspection and I would recommend getting it done. Thanks for the help.